Enhanced Oil Recovery EOR Resultados y Tendencias en

Enhanced Oil Recovery (EOR) Resultados y Tendencias en el Mundo May 21, 2008 Chuck Norman cnorman@tiorco. com TIORCO Inc.

Agenda • Oil Supply/Demand Distribution of Oil Reserves • Oil Recovery Mechanisms and EOR Targets • Types of EOR Technologies and EOR Candidates • Worldwide EOR Production • Average EOR Recovery Factors • EOR Economics • Reasons for EOR Failures • Conclusions TIORCO, Inc – The Improved Oil Recovery Co

Situacion Actual, Mayo 2008 • Aspo, la Association for The Study of Peak Oil, radicada en Europa, con un surcursal en Bs. As. - “La crisis es peor de lo que imaginamos. No existen posibilidades de incrementar la produccion mundial por encima de los 85 millones de barriles por dia. ” - Kajel Aleklett, de ASPO • “Se calcula que cerca de 50 regiones, entre las que figura EE. UU, el Mar del Norte y hasta Argentina, ya alcanzaron la cima y, por lo tanto, produciran cada vez menos petroleo. Clarin, May 4, 2008 TIORCO, Inc – The Improved Oil Recovery Co

EOR and Price Expectations • 2002: la International Energy Agency (IEA) y el Dept. of Energy (DOE) de EE. UU proyectan el precio del barril entre US$22 y US$27 en 2020. • 2009 Forecasts - Lehman Brothers: us$80 - Goldman Sachs: us$200 TIORCO, Inc – The Improved Oil Recovery Co

Oil Consumption and Industrialization 35 Oil Consumption Increases Fastest During Early Industrialization Per Capita (Bbls / Year 30 25 20 U. S. 15 10 5 Japan South Korea China India 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 TIORCO, Inc – The Improved Oil Recovery Co

Chinese Oil Imports 3, 000 50 2, 500 kb/d 2, 000 1, 500 NYMEX WTI 45 40 35 30 25 1, 000 500 US$/bbl Net Crude Imports 20 15 10 0 5 -500 0 1 Q 93 1 Q 94 1 Q 95 1 Q 96 1 Q 97 1 Q 98 1 Q 99 1 Q 00 1 Q 01 1 Q 02 1 Q 03 1 Q 04 1 Q 05 TIORCO, Inc – The Improved Oil Recovery Co

U. S. Petroleum Production and Imports Petroleum (MM BBLS/Day) 12 10 Domestic Petroleum Production 8 6 4 Imported Petroleum 2 0 ‘ 48 ‘ 53 ‘ 58 ‘ 63 ‘ 68 ‘ 73 ‘ 78 ‘ 83 ‘ 88 ‘ 93 ‘ 98 Year TIORCO, Inc – The Improved Oil Recovery Co

Argentina Monthly Oil Rate vs Time William Cobb (2006) 1, 000 BO TIORCO, Inc – The Improved Oil Recovery Co

Regional Distribution of Global Oil Reserves Others 112 B Bbls - 10% North America 62 B Bbls - 4% West Africa 46 B Bbls - 4% North Sea 14 B Bbls - 1% Middle East 734 B Bbls - 64% North Africa 60 B Bbls - 5% South America 62 B Bbls - 5% FSU 78 B Bbls - 7% TIORCO, Inc – The Improved Oil Recovery Co

Oil Recovery Mechanisms CONVENTIONAL RECOVERY PRIMARY RECOVERY SECONDARY RECOVERY Natural Flow Artificial Lift (Pump, Gas Lift, etc. ) Waterflood Pressure Maintenance (Water, Gas Reinjection) EOR TERTIARY RECOVERY Thermal Adapted from the Oil & Gas Journal, Apr 23, 1990 Solvent Chemical Other TIORCO, Inc – The Improved Oil Recovery Co

Expected Oil Recovery Efficiencies PRIMARY METHODS Liquid and Rock Expansion Solution Gas Drive Gas Cap Expansion Gravity Drainage Water Influx SECONDARY METHODS Gas Reinjection Waterflooding Sandrea, Oil & Gas Journal (Nov 2007) OOIP (%) Up to 5 20 30 40 60 Up to 70 TIORCO, Inc – The Improved Oil Recovery Co

EOR Targets: % OOIP LIGHT OILS EOR Target 45% OIP Primary 25% OIP Secondary 30% OIP HEAVY OILS Primary 5% OIP Secondary 5% OIP TAR SANDS EOR Target 100% OIP EOR Target 90% OIP Assumes Soi – 85% PV and Sw = 15% PV Thomas, Oil & Gas Science and Technology (2008) TIORCO, Inc – The Improved Oil Recovery Co

EOR Targets, 2005 Cumulative Production 183 Billion Barrels Discovered Unrecoverable by Current Technology 377 Billion Barrels (45% already abandoned) Target for EOR Technologies Proven Reserves 22 Billion Barrels Undiscovered Recoverable by Current Technology 30 Billion Barrels US Department of Energy (2005) Target for Advanced Exploration Undiscovered Unrecoverable Technology by Current Technology 37 Billion Barrels TIORCO, Inc – The Improved Oil Recovery Co

EOR Targets, 2007 United States Cumulative Production Canada Rest of World TOTALS (B bbls) 234 31 813 1, 078 OPEC (Middle East) -- -- 662 Other Conventional 19 7 378 404 Deepwater 8 3 50 61 Arctic 5 3 110 118 76 6 510 592 -- 167 227 444 500 4 200 704 83 15 660 758 925 236 3660 4, 821 Enhanced Oil Recovery Extra Heavy Oil Shale Extract Exploration Potential TOTALS (B bbls) Jackson, JPT (2007) TIORCO, Inc – The Improved Oil Recovery Co

Definition of EOR • Oil Recovery by Injection of Fluids not normally present in the reservoir • Excludes waterflooding TIORCO, Inc – The Improved Oil Recovery Co

Thermal EOR Methods THERMAL Hot Water Steam Flood CSS Frac Non-Frac Steam SAGD In-Situ Conductive Heating Elec. Heat Forward Reverse VAPEX Dry VAPEX + Steam SAGP Wet Hi Press. Air Inj. W/ Additives THAI CAPRI TIORCO, Inc – The Improved Oil Recovery Co

Non-Thermal EOR Methods NON-THERMAL Miscible Slug Process Enriched Gas Drive Vaporizin g Gas Drive CO 2 Miscible N 2 Miscible Alcohol Chemical Imm. Gas Drives Other Polymer CO 2 MEOR Surfactant Flue Gas FOAM Alkaline Inert Gas Micellar ASP Emulsion TIORCO, Inc – The Improved Oil Recovery Co

EOR vs. Depth EOR Method Depth (feet) 2, 000 Hydrocarbon Miscible Nitrogen and Flue Gas CO 2 Miscible 4, 000 6, 000 8, 000 10, 000 Deep enough for required pressure Limited by temperature Surfactant Polymer Limited by temperature Polymer Alkaline Fireflood Deep enough for required pressure Steam Drive Good Possible Fair Difficult Not Feasible Dr. Larry Lake, Oilfield Review (Jan. 1992) TIORCO, Inc – The Improved Oil Recovery Co

Oil Resources by Depth TOTAL 12. 8 Trillion Barrels DEEP 21% 2. 7 Trillion Bbls (>10, 000 Ft) INTERMEDIATE 45% 5. 7 Trillion Bbls (3, 500 – 10, 000 Ft) SHALLOW 34% 4. 4 Trillion Bbls (<3, 500 Ft) Sandrea, Oil & Gas Journal (Nov 2007) TIORCO, Inc – The Improved Oil Recovery Co

Distribution of Global Oil Reserves by Depth Remaining Reserves (1 P), 2006 Conventional Non-Conventional Billion Bbls of Oil % Shallow (<3, 500 ft) 163 14 293 100 Intermediate (3, 500 – 10, 000 ft) 663 58 -- -- Deep (>10, 000 ft) 321 28 -- -- 1, 147 100 293 100 HIS, Credit Suisse TIORCO, Inc – The Improved Oil Recovery Co

EOR vs. Viscosity EOR Method 1. 0 Oil Viscosity (centipoise at reservoir conditions) 10, 000 1, 000 Hydrocarbon Miscible Nitrogen and Flue Gas CO 2 Miscible Surfactant Polymer Alkaline Fireflood Steam Drive Good Possible Fair Difficult Not Feasible Dr. Larry Lake, Oilfield Review (Jan. 1992) TIORCO, Inc – The Improved Oil Recovery Co

Gravity Distribution of World’s Oil TOTAL 12. 8 Trillion Barrels LIGHT 22% 2. 8 Trillion Bbls (>35° gravity) MEDIUM 44% 5. 6 Trillion Bbls (26 -35° gravity) HEAVY 1% 1. 4 Trillion Bbls (<26° gravity) EXTRAHEAVY 23% 3. 0 Trillion Bbls (<10° gravity) Sandrea, Oil & Gas Journal (Nov. 2007) TIORCO, Inc – The Improved Oil Recovery Co

EOR vs. Permeability EOR Method Permeability (md) 100 10 Hydrocarbon Miscible Nitrogen and Flue Gas CO 2 Miscible 1, 000 100, 000 Not critical if uniform High enough for good injection Surfactant Polymer Alkaline Fireflood Steam Drive Good Possible Fair Difficult Not Feasible Dr. Larry Lake, Oilfield Review (Jan. 1992) TIORCO, Inc – The Improved Oil Recovery Co

Chemical EOR Processes Process Typical Ultimate Recovery (%OOIP) Polymer 5 1 lb polymer / Incremental bbl Micellar / Polymer 15 10 -25 lb surfactant / Incremental bbl Alkaline / Polymer 5 35 -45 lb surfactant / Incremental bbl Typical Agent Utilization TIORCO, Inc – The Improved Oil Recovery Co

Gas (Miscible and Immiscible) Process Typical Ultimate Recovery (%OOIP) Miscible 10 - 15 10 MCF / Incremental bbl Immiscible 5 - 10 10 MCF / Incremental bbl Agent Utilization TIORCO, Inc – The Improved Oil Recovery Co

Thermal Recovery Processes Process Typical Ultimate Recovery (%OOIP) Agent Utilization Steam (drive and soak) 50 - 65 0. 5 bbl / Net Incremental bbl Combustion 10 - 15 10 MCF air / Incremental bbl TIORCO, Inc – The Improved Oil Recovery Co

EE. UU EOR Production, 2000 800 Production (M BBLS/Day) Nitrogen Injection HC Gas Injection 600 Flue Gas Injection CO 2 Injection 400 Thermal 200 0 1984 Chemical 1986 1988 1990 1992 1994 1996 1998 2000 Year Moritis, Oil & Gas Journal (2000) TIORCO, Inc – The Improved Oil Recovery Co

EE. UU EOR Production, 2008 800 Production (M B/D) TOTAL 600 Thermal 400 Gas 200 Chemical 0 1986 1990 1994 Thomas, Oil & Gas Science and Technology (2008) 1998 2002 2006 TIORCO, Inc – The Improved Oil Recovery Co

Est. Worldwide EOR Production, 1990 (M Barrels / Day) Country Thermal Miscible EOR Total % 454 191 11. 9 656. 9 42 Canada 8 127 17. 2 152. 2 10 Europe 14 3 -- 17. 0 1 Venezuela 108 11 -- 119. 0 7 Other S. A. 2 NA NA 17. 0 1 USSR 20 90 50. 0 160. 0 10 Other (est’d. ) 171* 280** 1. 5 452. 5 29 Total 777 702 80. 6 1, 574. 6 100 USA SOURCE: Oil & Gas Journal (1990) * Mainly Indonesia ** Mainly Algeria and Libya Chemical TIORCO, Inc – The Improved Oil Recovery Co

Est. Worldwide EOR Production, 2007 Other 17, 800 B/D 22% Canada 325, 500 B/D 14% Venezuela 365, 600 B/D 16% Indonesia 220, 000 B/D 10% China 166, 900 B/D 7% USA 649, 300 B/D 30% Mexico 500, 000 B/D 22% Thomas (2008) Percentages are those of total EOR production of 2. 5 TIORCO, Inc – The Improved Oil Recovery Co

Canada EOR, 2006 3 1 2 4 3 21 2 Acid Gas 10 1 CO 2 Combustion Hydrocarbon (Natural Gas) Steam Nitrogen Oil & Gas Journal (April 2006) TIORCO, Inc – The Improved Oil Recovery Co

EE. UU EOR, 2006 11 Alaska 3 5 3 1 1 39 2 3 9 1 1 5 1 1 2 14 50 1 Steam Water Combustion CO 2 Gas 6 2 Oil & Gas Journal (April 2006) 1 TIORCO, Inc – The Improved Oil Recovery Co

Central and South America EOR, 2006 1 38 2 8 5 3 CO 2 Hydrocarbon Steam Nitrogen Oil & Gas Journal (April 2006) TIORCO, Inc – The Improved Oil Recovery Co

Rest of World EOR, 2006 1 1 17 2 19 1 5 2 Oil & Gas Journal (April 2006) CO 2 Combustion Steam Microbial Polymer TIORCO, Inc – The Improved Oil Recovery Co

Summary of Active EOR Projects, 2006 Type Steam Number of Projects Production (Bbls/Day) Depth (Feet) API Gravity (°) 119 76 – 220, 000 350 – 5, 740 8 – 26 CO 2 94 100 – 35, 000 1, 900 – 10, 900 19 – 43 HC Gases 38 10 – 80, 000 4, 040 – 14, 500 15 – 45 Combustion 21 100 – 8, 100 1, 640 – 9, 500 18 – 38 Polymer 20 53 – 4, 900 1, 063 – 4, 626 21 – 34 Nitrogen 5 1, 000 – 500, 000 4, 600 – 15, 400 16 - 51 OGJ Worldwide EOR Survey, 2006 TIORCO, Inc – The Improved Oil Recovery Co

Major EOR Projects and Production 700 Total Thermal Gas Chemical Production (M B/D) 500 300 100 0 USA Mexico Canada Thomas, Oil & Gas Science and Technology (2008) Venezuela Indonesia China TIORCO, Inc – The Improved Oil Recovery Co

Comparison of EOR Techniques Incremental Oil Cost ($/BBL) 60 50 Surfactant 40 30 CO 2 Injection 20 Thermal Polymer 10 MEOR Waterflood 0 0 10 20 30 40 50 60 70 80 Total Recovery (% OOIP) Simandoux et al. IFT Journal (1990) TIORCO, Inc – The Improved Oil Recovery Co

2006 Global EOR Average Costs 15 13 US $ / Barrel 11 9 7 5 3 1 Exploration & Acquisitions Capex Development Deep Water Sandrea, Oil & Gas Journal (Nov. 2007) Capex Heavy Oil Capex EOR TIORCO, Inc – The Improved Oil Recovery Co

Reasons for EOR Failures • Low Oil Prices - oil price instability • Insufficient description of Reservoir Geology - Underestimated Reservoir Heterogeneity • Inadequate understanding of EOR mechanism - Bad Candidate Selection • Unavailability of Chemicals in large quantities - Insufficient Budget (lack of commitment) • Heavy reliance on lab experiments - And too much reliance on simulation • Poor post treatment evaluation Comments in white from S. M. Farouq Ali (2007) TIORCO, Inc – The Improved Oil Recovery Co

Ideal Enhanced Oil Recovery (EOR) Carbon Dioxide Injection Well Produced Fluids(oi, gas, water) Separation and Storage Facilities Production Well Water Injection Pump Drive Water CO 2 Miscible Zone CO 2 Add’l Oil Recovery Oil Bank TIORCO, Inc – The Improved Oil Recovery Co

Real World EOR Carbon Dioxide Injection Well Produced Fluids(oi, gas, water) Separation and Storage Facilities Production Well Water Injection Pump TIORCO, Inc – The Improved Oil Recovery Co

R. Braun, E. Debons, Texaco (1989) TIORCO, Inc – The Improved Oil Recovery Co

How to Convert EOR to IRR (TIR) 1) Consider reservoir heterogeneity 2) Predicting results is difficult 3) The more you inject, the more you get 1) Single well pilots usually not successful 4) Detailed Evaluation is essential 5) EOR is not a panacea, but will play an increasingly important role in the future 1) 70% of current oil production from mature fields TIORCO, Inc – The Improved Oil Recovery Co

Enhanced Oil Recovery (EOR) Resultados y Tendencias en el Mundo May 21, 2008 Chuck Norman cnorman@tiorco. com TIORCO Inc.